Question

You deposit $1,300 at the end of each year into an account paying 9.6 percent interest per year.

Required:
(a)	How much money will you have in the account in 22 years?
	(Click to select)  33,954.37  77,716.44  28,600.00  100,261.18  88,201.28

(b)	How much will you have if you make deposits for 44 years?
	(Click to select)  750,886.18  1,020,171.69  554,991.82  94,942.73  57,200.00

Answer 1

Given the following,

Annual deposit = C =  $1300

interest rate per year = r = 9.6% = 0.096

a) Value at the end of the year is given by the formula,

Future value at year t = [C*(1+r)^t - 1]/ r

t = 22 years

[C*(1+r)^t - 1]/ r

[1300*((1+0.096)^22 - 1)]/ 0.096

[1300*((1.096)^22 - 1)]/ 0.096

[1300*(7.513 - 1)]/ 0.096

[1300*(6.513)]/ 0.096

1300*67.847

88201.28

Therefore value at the year 22 =  88201.28

b) Value at the end of the year is given by the formula,

Future value at year t = [C*(1+r)^t - 1]/ r

t = 44 years

[C*(1+r)^t - 1]/ r

[1300*((1+0.096)^44 - 1)]/ 0.096

[1300*((1.096)^44 - 1)]/ 0.096

[1300*(56.450 - 1)]/ 0.096

[1300*(55.450)]/ 0.096

1300*577.604

750886.18

Therefore value at the year 44 = 750886.18